NATIONAL ECONOMIC COUNCIL APPROVES FISCAL SUSTAINABILITY PLAN FOR STATE GOVTS WITH FOCUS ON ACCOUNTABILITY & TRANSPARENCY

 

Highlight of 67th NEC meeting – Thursday, 19th  May, 2016  The National Economic Council, NEC held its monthly meeting, presided over by the Chairman of the Council, the Vice President Yemi Osinbajo, SAN. 

Besides other key highlights, the Council approved a Fiscal Sustainability Plan which is aimed at helping the states of the federation navigate the current economic conditions including a massive drop in Federation Account allocation funds.

 

NEC which is composed of all 36 State Governors and the CBN Governor, meets monthly.

 

Highlights

A. Report on excess crude proceeds

·                     Honourable      Minister of Finance (HMF) reported to the Council that the balance in the      ECA stood at (USD 2,259,688,878.06 billion) as at 30th April,      2016.  She disclosed that interest accrued on the account is USD      429,903.55 for the month of April 2016 experiencing a little drop in      interest.

B. Update on the reconstitution of the board of Niger Delta Power Holding Company (NDPHC)

 

·                     The      Chairman of Council, the Vice President informed that His Excellency, the      President has approved the reconstitution of the board, which will be      effected in due course.

 

C. Update by NEC Ad-hoc Committee on management of the Excess Crude Account (ECA) and payment into the Federation Account

 

·                     Edo      State Governor reported to the Council that their sub-committee endorsed      the forensic auditors firms as earlier proposed by the Finance Minister to      audit the ECA. 

 

D. Update by NEC Ad-hoc Committee on crude oil theft prevention and control

 

·                     Bayelsa      Deputy Governor reported to the Council that, the Committee set-up      sometimes in 2013 consulted widely with relevant stakeholders including      the Armed Forces Joint Task Force (JTF), Oil Companies, Oil Producing      States, Nigerian Security and Civil Defence Corps (NSCDC) among others.

·                     Key      findings of the Committee as to the causes of crude oil theft include:

             i.Inadequate      operational patrol vessels to conduct patrol of entire pipeline network;

           ii.Massive      unemployment among youths in the region attributed to increasing incidence      of theft and vandalism;

         iii.Non      availability of petroleum products in the Niger Delta Area also      responsible for reoccurrence illegal bunkering.

Recommendations:

Among the key recommendations of the Committee are:

             i.Procurement      and deployment of appropriate technology in surveillance and combat      vehicles/boats in difficult terrain would drastically reduce incidents of      oil thefts and illegal bunkering and this would ensure full benefits of      uninterrupted supply.

           ii.Federal      Government should set up special courts for speedy prosecution of oil      bunkerers and oil theft suspects.

         iii.Engagement      of traditional rulers to sensitize their communities on the criminal and      environmental dangers of oil theft.

Way forward

Among others are:

·                     Increase      the refining capacity of the domestic refineries through      relocation/co-locating smaller cost-efficient refineries within time frame      of 12 – 24 months.

·                     Focus      on restoring upstream production by positively engaging host communities      to put the current militancy to an end.

·                     Focus      on improving Government funding in the upstream sector where funding has      been less than 30%.

·                     Relieve      Government of monthly cash-call funding and create a sustainable      self-funding arrangement.

·                     Continue      to engage the general public and all stakeholders by providing relevant      information and education.

E. Update on states that have received bailouts funds and those outstanding

CBN Governor reported that:

·                     30      States have so far benefited with the salary bailout as at 18thMay,      2016

·                     35      States have applied for the Excess Crude Account-backed loans

F. Update on fuel supply and marketing

The Minister of State for Petroleum briefed the Council, and stated that:

·                     Fuel      scarcity was due to non-availability of FOREX as a result of significant      decline in government foreign earnings due to 60% drop in global crude oil      price compared to 2014.

·                     NNPC      supply dynamics had crumbled and NNPC is now straining to supply over 90%      of the national demand for PMS from the 48% it was designed to supply.

·                     Prevalent      hoarding, smuggling and diversion of the product have reduced volumes      available for citizens/end users.

·                     Scarcity      has created abnormal increase in prices resulting in our people paying an      average of N150 – N300 per litre.

·                     There      is no provision for subsidy in 2016 Appropriation as current estimated      subsidy claim per month is N16.4 billion

·                     Consequences      of imminent difficult situation if not addressed would be:

·                     Inability of government at all levels to pay      salaries or meet financial obligations

·                     Increased scarcity of product leading to long queues 

·                     Continuous upward surge of prices across the      nation.

 G. Presentation on strategic plan for 2016 budget implementation   

 

·                     Minister      for Budget and National Planning made a presentation to the Council on      Strategic Implementation Plan for the 2016 Budget of Change.

·                     Key      highlights of the presentation are:

·                     Implementation of 34 priority actions across 4      fundamental areas to progressively facilitate true national      transformation.

·                     The 4 fundamental areas constitute the focal      points for prioritized execution and implementation of the Government’s      short -term strategy as follows:

             i.Investing      in critical infrastructure

           ii.Embracing      and encouraging private sector

         iii.Continuously      advocating for greater social inclusion

         iv.Improving      security and tackling corruption.

·                     Among      the strategies for achieving the goals across 6 thematic areas of the 2016      budget are as follows:

             i.Changes in the policy environment, National      Security and Governance

           ii.Diversifying the economy by fast-tracking      Industrialisation, Agriculture and Agro-Allied Processing, as well as      attracting investment into solid minerals, Tourism and Entertainment      sectors.

         iii.Priority critical infrastructure, focused on      increasing investment in power, rail, roads and housing.

         iv.Oil and Gas Reform

           v.Ease of doing business

         vi.Social investment

·                     Robust      Monitoring and Evaluation (M&E Framework)

·                     The Strategic implementation plan would      be incomplete without a focus on systematically tracking the achievement      of actual outputs and outcomes.

·                     Ministry of Budget and National Planning will,      going forward, utilize the revised National Monitoring &Evaluation      framework to institutionalise the process of carrying out physical      inspections and other verification exercises

·                     Impact Assessment of policies, projects and      programmes on regular basis at the national level

·                     The M&E reports will be an input into the      process for capital allocation releases to MDAs.

·                     NBS tracking of statistical indices are      critical in measuring performance and rewarding delivery.

I. Presentation of policy draft on Fiscal Sustainability Plan  

 

In response to previous requests, the Honourable Minister of Finance made a presentation to the Council on Fiscal Sustainability Plan and Fiscal Framework for Sub-National Governments in Nigeria.  This included:

·                     Five (5) key strategic objectives and      recommended action points with a view to achieving objectives around      improved fiscal behaviour that will align both short-term and long-term      sustainability objectives of the Federal and State Governments

·                     The 5 key elements are:

             i.Accountability and Transparency;

           ii.Increase in Public Revenue;

         iii.Rationalisation of Public Expenditure;

         iv.Public Financial Management Reforms; and 

           v.Sustainable Debt Management.

Council then approved the Fiscal Sustainability Plan.

 

J. Presentation on policy paper on solid minerals exploration by both Federal and State governments

 

·                     Minister      of State for Solid Minerals presented a policy paper to the Council.       The highlights of the paper among others are:

             i.Nigeria was once a mining nation and ranked as      a leading producer and exporter of columbite, sixth producer/exporter of      the metal and producer of coal amongst others.

           ii.Nigeria lost those positions due to greater      attention to oil exploration and exploitation, and also the indigenisation      Decree of the 70s that led to the departure of the multinationals that      owned the then Tin and Columbite mines.

·                     The      policy paper was presented to NEC to apprise the reforms of the minerals      sector and to particularly address issuance of licences for solid minerals      exploration by both Federal and State Governments.